Geopolitical and geoeconomic shifts: moving towards a multipolar world There will be significant areas of geopolitical and geoeconomic continuity in the 2020s: the US will remain an economic, military and diplomatic superpower, and the UK’s most important strategic ally. The Euro-Atlantic region will remain critical to the UK’s security and prosperity; partnerships beyond the immediate European neighbourhood will also remain important. Russia will remain the most acute direct threat to the UK, and the US will continue to ask more from its allies in Europe in sharing the burden of collective security. Overall, however, the distribution of global political and economic power – both within and between states, and between regions – will continue to change, with direct and indirect implications for UK interests. By 2030, it is likely that the world will have moved further towards multipolarity, with the geopolitical and economic centre of gravity moving eastward towards the Indo-Pacific. China as a systemic competitor. China’s increasing power and international assertiveness is likely to be the most significant geopolitical factor of the 2020s. The scale and reach of China’s economy, size of its population, technological advancement and increasing ambition to project its influence on the global stage, for example through the Belt and Road Initiative, will have profound implications worldwide. Open, trading economies like the UK will need to engage with China and remain open to Chinese trade and investment, but they must also protect themselves against practices that have an adverse effect on prosperity and security. Cooperation with China will also be vital in tackling transnational challenges, particularly climate change and biodiversity loss. Shifts in the global balance of economic power. Drivers of growth in the global economy are likely to continue moving to the south and east, in particular towards the Indo-Pacific region. The rapid growth of emerging markets is also expected to increase the size of the global middle class, from 3.8 billion people in 2018 to 5.3 billion in 2030, increasing opportunities for trade in higher value-added goods and services. This will offer considerable opportunities for countries like the UK with its strengths in these areas. Global growth and economic stability. Before COVID-19, the world was already facing a decade of weak growth. COVID-19 has caused a deep global recession and the economic impact of the pandemic is likely to dominate the first half of the decade, with the shape of the recovery uncertain. Further economic shocks are possible, for example caused by the uneven impact of new technologies across and within states. The expected shift away from fossil fuels is likely to present economic challenges, particularly for oil-producing countries. Challenges to an open global economy. Globalisation began to stall after the 2008-09 financial crisis. COVID-19 will likely accelerate the trend towards more regional and national approaches, although trade flows recovered relatively quickly following the initial shock. The momentum for trade liberalisation may continue to slow and cases of protectionism increase, driven by political and economic conditions within states and the increasingly aggressive use of economic and trade policy as a lever in competition between states. 26 Integrated Review